Defence minister Khaled Nordin said the move was necessary as the government had already paid nearly 95% of the contract value, amounting to more than RM500 million.

“A special committee at the ministry level has been set up to detail the claims, which involve not only the refund of the original payment but also compensation arising from the breach of contract,” he said.

Speaking to reporters after launching the Prowira Ready-to-Work Graduates Programme and the Armed Forces Fund Board Foundation Education Initiative 2026 here today, he said the ministry was also evaluating several alternatives to replace the NSM system.

He said another committee had been formed to study suitable replacement systems that could be supplied within a short timeframe.

However, he said the process was not straightforward as the missile system must be compatible with the ships’ existing communication, electrical, and operational systems.

He said the integration process for the new system was expected to take several months.

Khaled said the cancellation of the NSM supply would not affect the delivery schedule of the first littoral combat ship (LCS), KD Maharajalela, to the navy in December this year.

“The LCS programme will continue as planned, except that the vessel will not initially be equipped with a surface-to-surface missile system,” he said.

According to the Kongsberg Defence & Aerospace website, the NSM procurement contract was signed between the navy and the company in April 2018, valued at 124 million euros (RM571.9 million), to equip six new LCS vessels.